From: rzilkowski@chindex.com
Sent: Thursday, November 07, 2002 5:09 PM
To: rule-comments@sec.gov
Subject: File No. S7-40-02
Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, NW, Washington, DC 20549-0609
Dear Mr. Katz,
While the audit committee definition of "financial expert" is more narrowly
defined by the provisions of Sarbanes Oxley there is little guidance in the SEC
as to the financial acumen of the CEO or CFO. Section 302 certification is
extensive and specific regarding GAAP, internal controls and financial statement
reporting in addition to other disclosures. While regulations S-X and S-K
define the signatories on the 10Q and 10K to include the chief accounting
officer or controller the Sarbanes Oxley act makes no specific requirement for
their certification. Also, by not defining the minimum standard of
understanding, both the CEO and CFO could be providing false assurances to the
public as to the accuracy of the financials.
I personally know of two CFO's who were never trained or educated in accounting
yet have this title. I agree that the criminal codes and penalties in the
statute would make either a CEO or CFO nervous if they even thought there was
misapplication. However, a fundamental lack of accounting experience,
particularly financial reporting experience, would severely limit their ability
to fully understand and comprehend some of today's complex requirements.
Regulation S-K section 229.401 requires the identification of directors and
executive officers including business experience. It does not require that the
chief financial officer be included in this list of executive officers. Also,
only when an executive officer has been employed for less than 5 years is there
any requirement to include professional competence.
I strongly encourage the commission to consider similar standards requirements
for the CFO as the Sarbanes Oxley act is defining for the audit committee and to
immediately elevate this position to required disclosure in regulation S-K
including professional competence. I would also encourage the commission to
consider requiring disclosure of the chief accounting officer (who is many times
not the chief financial officer) and their background as well. This would only
serve to assure the public that the financial reporting, particularly on an
interim basis, is being performed in a professional and competent manor.
Sincerely,
Ronald Zilkowski
301-215-7777